Cathay Pacific 2015 Annual Report Download - page 106

Cathay Pacific Airways Limited
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The asset or liability recognised in the statement of
financial position is the present value of the cost of
providing these benefits (the defined benefit
obligations) less the fair value of the plan assets at the
end of the reporting period. The defined benefit
obligations are calculated annually by independent
actuaries and are determined by discounting the
estimated future cash flows using interest rates of high
quality corporate bonds. The plan assets are valued on
a bid price basis.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to other comprehensive income in
the statement of profit or loss and other
comprehensive income in the period in which they
arise. Past service costs are recognised immediately in
the statement of profit or loss and other
comprehensive income.
For defined contribution schemes, the Group’s
contributions are charged to the statement of profit or
loss and other comprehensive income in the period to
which the contributions relate.
13. Deferred taxation
Deferred taxation is provided in full, using the liability
method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, if the
deferred tax arises from initial recognition of an asset
or liability in a transaction other than a business
combination that, at the time of the recognition, has no
impact on taxable nor accounting profit or loss, it is
not recognised.
Deferred tax assets relating to unused tax losses and
deductible temporary differences are recognised to
the extent that it is probable that future taxable profits
will be available against which these unused tax losses
and deductible temporary differences can be utilised.
In addition, where initial cash benefits have been
received in respect of certain lease arrangements,
provision is made for the future obligation to make
tax payments.
14. Stock
Stock held for consumption is valued either at cost or
weighted average cost less any applicable allowance
for obsolescence. Stock held for disposal is stated at
the lower of cost and net realisable value. Net realisable
value represents estimated resale price.
15. Assets held for sale
Non-current assets are classified as assets held for
sale when their carrying amounts are to be recovered
principally through a sale transaction and a sale is
considered highly probable. They are stated at the
lower of carrying amount and fair value less costs
of disposal.
16. Revenue recognition
Passenger and cargo sales are recognised as revenue
when the transportation service is provided. The value
of unflown passenger and cargo sales is recorded as
unearned transportation revenue. Income from
catering and other services is recognised when the
services are rendered. Interest income is recognised as
it accrues while dividend income is recognised when
the right to receive payment is established.
17. Maintenance and overhaul costs
Replacement spares and labour costs for maintenance
and overhaul of aircraft are charged to profit or loss on
consumption and as incurred respectively unless they
are capitalised according to the accounting policy 5.
18. Loyalty programme
The Company operates a customer loyalty programme
called Asia Miles (the “programme”). As members
accumulate miles by travelling on Cathay Pacific or
Dragonair flights, or when the Company sells miles to
participating partners in the programme, revenue from
the initial sales transaction equal to the programme
awards at their fair value is deferred as a liability until
the miles are redeemed or the passenger is uplifted in
the case of the Group’s flight redemptions. Breakage,
the proportion of points that are expected to expire, is
recognised to reduce fair value, and is determined by a
number of assumptions including historical experience,
future redemption pattern and programme design.
Principal Accounting Policies